The Nigerian government has introduced a landmark reform—The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), aimed at revitalizing its oil and gas industry.
Signed by President Bola Ahmed Tinubu, the executive order is expected to attract new investment, increase national production levels, and enhance fiscal returns from upstream oil and gas operations.
Speaking on the development, NJ Ayuk, Executive Chairman of the African Energy Chamber (AEC), lauded Nigeria’s leadership.
“This recent executive order is a testament to Nigeria’s commitment to strengthening its regulatory landscape, improving fiscals and supporting revenue generation across the oil and gas industry.
“The order is expected to play a significant role in attracting new investment into the country at a time when national production goals require greater capital and technology injection.”
NJ Ayuk, Executive Chairman of the African Energy Chamber (AEC)
The order introduces performance-based tax incentives, rewarding operators that meet verifiable cost-efficiency benchmarks.
It builds upon Nigeria’s existing legal framework under the Petroleum Industry Act (PIA) of 2021 and marks a significant push to reestablish Nigeria as a competitive destination for hydrocarbon development amid rising global energy demand.
Under the order, operators who deliver cost savings in line with annually published benchmarks by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will qualify for tax incentives.
The benchmarks will be asset-specific, covering onshore, shallow-water, and deep-water operations. However, to preserve national revenue, available tax credits will be capped at 20% of an operator’s annual tax liability.
Special Advisor to the President on Energy, Olu Verheijen, has been appointed to coordinate inter-agency efforts to ensure successful implementation of the executive order and to help operators maximize benefits under the policy.
“This is not just an economic measure, but a reform with wide-reaching implications for energy security and regional competitiveness.”
Olu Verheijen, Special Advisor to the President on Energy
Critical Juncture for Nigeria
The introduction of the order comes at a crucial time. Nigeria aims to increase oil production to 2 million barrels per day (bpd) and raise gas output to 12 billion standard cubic feet per day (bscf/d), up from the current 7.3 bscf/d.
However, years of regulatory uncertainty, underinvestment, and global shifts in fossil fuel financing have hampered production growth.
The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) seeks to reverse this trajectory, providing clarity and incentives in tandem with the broader reforms introduced by the PIA in 2021.
Together, these reforms signal to investors that Nigeria is serious about creating a stable and attractive operating environment.
In 2024 alone, Nigeria attracted $6.7 billion in energy-related investments, $5.5 billion of which went to asset acquisitions. Looking ahead, the government aims to unlock $30 billion in oil and $5 billion in gas investment by 2029, leveraging the dual framework of the PIA and the new incentives order.
“The combination of smart regulation, cost discipline, and investor confidence is setting the stage for a Nigerian energy renaissance.
“This is how you win back capital and reposition the country in a globally competitive oil and gas market.”
NJ Ayuk, Executive Chairman of the African Energy Chamber (AEC)
The Nigerian government’s strategy is clear: stimulate investment, enhance productivity, and secure fiscal sustainability.
With the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), Nigeria is not only doubling down on production but also cementing its role as a regional energy hub.
“Nigeria’s bold action reaffirms its place as a leader in Africa’s energy future. The time to invest is now.”
NJ Ayuk, Executive Chairman of the African Energy Chamber (AEC)
While challenges persist—such as infrastructure limitations, security concerns in oil-producing regions, and global energy transitions—Nigeria’s recent policy shift is widely regarded as a major step forward.
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